MTBPS: Some SOEs should be closed, says Enoch Godongwana
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Cape Town - Finance Minister Enoch Godongwana has signalled that some of the State-Owned Entities could be folded and the strategic ones be allowed to remain in business.
Some of the SOEs could be merged with others in the process of this restructuring.
However, they will not use a blanket approach when handling the issue of the entities.
This was because some of them were not financially viable and the State was bailing them out.
However, he would not say which SOEs could be folded.
The government signalled this position some time ago as it faced serious challenges of bailing out a number of entities.
Over the years billions have been spent to rescue ailing state entities.
He said on Thursday they had not given any bailouts to the entities in the Medium-Term Budget Policy Statement (MTBPS).
“On the SOEs, we are not approaching that question from a religious position, but we will be guided by the balance of evidence,” said Godongwana.
He said they would look at the strategic SOEs and keep them.
“I have carefully used that notion in that statement, strategic. We have to ask the question, how strategic is that state-owned entity in the scheme of government? It will have to demonstrate it is strategic. You will have to evaluate those institutions on those basis. It’s not a blanket issue,” he said.
In his speech he said SOEs were badly managed in the past. It was time for restructuring.
“Many SOEs, however, have been badly managed and have failed to deliver. In many instances they have also been devastated by state capture making them increasingly reliant on government support. Since 2013, government directed more than R290 billion to bail out SOEs, at the expense of important social expenditure.
“Going forward, the restructuring of state-owned companies, informed by an assessment of their strategic relevance, is a priority. In this MTBPS, no additional funding is provided for state-owned companies.
“The exception to this is where guarantees have been called by creditors and conditions have been met by the SOE in question, within the context of their strategic importance. We must be prepared to consolidate some of our SOEs and let go of those that are no longer considered strategically relevant,” said Godongwana.